Manufacturing output declines for 10th consecutive month, reports ISM
Summary
Manufacturing activity contracted in December for the 10th straight month, according to the Institute for Supply Management’s Manufacturing Report on Business. The PMI registered 47.9 (below the 50 threshold for growth), down 0.3 points from November and 1.0 point under the 12-month average of 48.9.
The report shows a mixed picture across sectors: Electrical Equipment, Appliances & Components and Computer & Electronic Products expanded, while many others — from Apparel to Transportation Equipment — contracted. Key subindexes highlighted weak new orders and employment, slower supplier deliveries, declining inventories and persistently higher prices.
Key Points
- PMI for December: 47.9, marking the 10th consecutive month of contraction.
- New Orders at 47.7 — still contracting but at a slightly slower pace for the fourth month running.
- Production at 51.0 — modest growth but slowing compared with earlier months.
- Employment at 44.9 — contracting for the 11th consecutive month, though the rate eased slightly.
- Supplier Deliveries at 50.8 — indicates slower deliveries; eight sectors reported slower deliveries.
- Inventories fell to 45.2 and Customers’ Inventories to 43.3 — both contracting and contributing to supply-side tightness.
- Prices remained elevated at 58.5, unchanged in the rate of increase for the 15th month, with 11 sectors reporting higher prices.
- Sectors in expansion: Electrical Equipment, Appliances & Components; Computer & Electronic Products. Many other sectors, including Chemical Products and Transportation Equipment, were in contraction.
- ISM panelists cited tariffs and the wider economy as central concerns; consumer sentiment weakened sharply, adding to downside risks.
Context and relevance
This report is a near-term snapshot of manufacturing health in the US and is especially relevant for supply chain, logistics and procurement professionals. Ten months of contraction, coupled with broad sector weakness (85% of the sector in contraction in December), suggests continued soft demand, pressure on employment, and inventory adjustments that will affect freight volumes, warehousing needs and procurement strategies.
The contrast inside the report — pockets of growth in electronics tied to AI data-centre buildouts versus widespread weakness in larger GDP-weighted sectors like chemicals — signals uneven recovery risks for 2026 and potential routing of investment and logistics flows toward expanding subsectors.
Why should I read this?
Short version: if you work with supply chains, fleets, warehouses or procurement, this matters. Ten months of falling manufacturing output means softer freight demand, ageing fleets staying parked, and tricky inventory decisions ahead. Read it to know which sectors are weak, which are holding up, and where demand might return later in 2026.
Author style
Punchy — this isn’t just another numbers dump. The ISM snapshot flags meaningful industry pain (and a few bright spots). If you want to understand near-term demand for transport, warehousing and parts, the detail here is worth a proper read.